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The advantages and disadvantages of leasing a car

Some of us like the idea of driving a new car every few years, this can cut repair expenses amongst other issues quite a bit and can only be possible by leasing a car.

Nowadays the common belief that buying a car was the only option has become obsolete, you no longer have to be driving a car for business reasons to be able to lease a car, now private individuals can also afford to choose this option. The financial aspect is one of the most luring aspects in car leasing, in that there is no actual financial commitment to the vehicle. When leasing a car you are committed to a capital cost reduction payment, which can be thought of as a down payment, the sum being relatively small as opposed to a full purchase. The monthly lease payment will also be considerably reduced compared with a monthly payment for the purchase of a new car.

Another great incentive is the tax deduction, especially if you can claim the car is being used for business purposes, this is also a way to reduce expenses considerably. Usually when leasing a car you will be returning it to the dealer before the manufacturers warranty has expired, thus offering you a great option on expensive repair work. The mileage on the car will also be relatively low, offering a reliable means of transportation.

There are however some disadvantages, such as penalty for excessive mileage, so if you intend to run high on your mileage you will have to expect to pay extra if you surpass the mileage agreed on. You will still be responsible for maintenance as all owners are and will have to make sure you have a complete insurance coverage for the car.

It will be important to check your lease payments carefully, for they may not include taxes; a lease payment should be lower than a loan payment for a new car, otherwise the advantage is no longer appreciable.

In general terms, car salesmen like the idea of lease, as the deal is a good one for them.

A cars depreciation rate is highest during the first two years, this rate then slows down, thus when leasing a car you will be dealing with a considerable loss of the cars value. If you own a car this rate will weigh down after the first three years, but of course by then you will be faced with maintenance expenses associated with the aging of the car.

Make sure you come to terms with all the complicated leasing terminology if you do decide to lease as opposed to buying a car, for it can be a head spinner. If you do get a hang of leasing procedures, car leasing can offer quite a few advantages and provide you with the comfort of a new car every two years.